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German Beer’s Greatness Agenda

“PURE SWILL,” READSthe title of an article in this week’s Economistcriticizing the German Reinheitsgebot on its five hundredth anniversary. (Never above spoiling a good celebration, the Economist.) The law protecting the purity of German beer is one of the most successful classic examples of the Greatness Agenda as it was found in the laws protecting the distinctive products of each region. The article? Pure swill indeed.

The arguments that the Economist‘s twentysomething writers recall from their introductory economics courses typically require all “protectionist” economic policies to be framed as ultimately anticompetitive. In a rationally functioning marketplace, every region can produce according to its strengths in order to buy what it needs. From each according to his ability, to each according to his need: was that not a capitalist nostrum?

Whether shiny new iPhones are produced in the U.S. or instead come off perfectly Taylorist factory lines elsewhere in the world hardly matters, according to the Economist. “Designed in California” is enough to make up for the fact that behind the sleek white walls of Apple’s stores flows a river of tears and blood. (The bodily fluids are copyrighted by the Pegatron Corporation, too.)

Since it doesn’t matter where anything is produced or by whom, today’s wizards suggest, it should follow that the notion of terroir is irrational. But appreciation of terroir is too much a class-status signifier to be abandoned that quickly. The appellation d’origine contrôlée has evaded attack, one suspects, because the titans who’ve enjoyed the spoils of outsourcing fill their vacant hours with wine-sampling, cheese courses and developing their sense of style by reading the WSJ “Mansion” section. Everything that they oppose in every other industry they make an exception for in wine, cheese and (excepting at the Economist) beer.

What they defend with their taste and criticize with their lips is, however, one of the most successful ideas of trade protectionism ever devised—and one that (coincidentally) contributed to the advance of civilization through the clarification of national greatness.DUKES WILHELM IV AND LUDWIG X essentially consecrated their own Greatness Agenda to the preservation of good beer. But we can hardly expect to reestablish any distinctive products, still less their greatness, now that we have permanently idled our factories, and dispersed our supply chains and manufacturing processes through a microrationalization that takes the division of labor to an absurd conclusion.

Following the demands of maximum industrial rationalization has made it progressively more difficult to form companies whose products could even be defended in the way that German beer once was. As the aspects of technological design and production become more widely dispersed, the ability of any corporate leader to grasp the whole of his company becomes ever more difficult. Consultancy veterans know that the process of making recommendations to companies is as much of a black box as the companies themselves. No one can take ownership of a process that has neither end nor means.

The Reinheitsgebot falls exactly outside every category modern economic analysis attempts to supply for it. Being a government-mandated standard to avoid the inclusion of diluents, poisons, rendered animal parts and the like in beer, the Reinheitsgebot was hardly libertarian. Yet it was not aimed at “market-rigging and protectionism” in the pejorative way the Economist frames it.

“By excluding wheat and rye in beer,” the Economist complains, “the law aimed to keep grain prices low for bakers.” According to the usual catechism, all prices should be set by the market, and so this “market-rigging” was presumably bad. Never mind the fact that direct and indirect price-setting pervades the modern economy—from the federal funds rate, to every price connected to the federal funds rate, to every price dependent on the quantity of and velocity of money, to the price of labor. Instead, when we look down on sixteenth-century Germans, we must sneer at their effort to keep grain prices low for bakers and hence for purchasers of bread. The fact that this particular Greatness Agenda succeeded in keeping bread affordable while also setting a standard for beer production that has lasted for half a millennium is apparently to be discounted.

ALL THE ECONOMIST‘S THINKERY CAN REVEAL to us is that “[the] real victim is variety” and that “the purity law has stifled German beer innovation.” This claim is somewhat akin to asserting that Bordeaux’s appellation d’origine contrôlée has stifled the region’s attempt to produce fine Bourgogne. If only Europe were governed by rational economic law, Chablis could be produced in Champagne, and next thing you know the English will be producing porto.

In spite of the supposed irrelevance of product origin, efforts to introduce blind taste testing in the world of food and drink have only been successful on occasions such as the famous “Judgment of Paris.” Normally, people want to know who produced what. That’s why the Trans-Pacific Partnership had to limit country of origin labeling on an array of food products that one should not purchase withoutknowing the country of origin. Otherwise, people might have preferred meat from their own nation to Chinese “variety.” (How this new policy could work with region-eponymous products such as Roquefort is rather less than clear.)

“You can get a whisky and soda at every outpost of the Empire,” Chesterton once wrote, and “that is why so many Empire builders go mad. But you are not tasting or touching any environment, as in the cider of Devonshire or the grapes of the Rhine. You are not approaching Nature in one of her myriad tints of mood, as in the holy act of eating cheese.” The political control of product labeling is only an extension of the political inclination to assertion and definition, of which the bounty of one’s region is a natural part. But today’s economists have strayed so far that even the attempt to defend one’s comparative advantage—the essential contribution of one’s terroir—cannot be justified in political terms.

Though the Economist criticizes the Reinheitsgebot for its threat to product diversity, one scholar has recently noted that “the U.S. three-tier [beer-making] system may be dated in that it constrains small producer growth in favor of maintaining the dominance of the largest brewers…. [Further,] by transplanting the E.U. system, which focuses more on alcohol advertising regulation and public health initiatives, small producer growth may be further encouraged while promoting the safe consumption of alcohol.”

To encourage American greatness through the greatness of its products, we must first have products to produce and the capacity to produce them. But as long as our economists claim they’re sobering us up with their pure swill, we’ll have no choice but to keep toasting the Agenda of American Greatness.